UW Economist Warns Tariffs Will Cost Wyoming Businesses, Residents

Wyoming residents and businesses will see higher costs from household appliances to heavy machinery if President Donald Trump's proposed tariffs go into effect, a University of Wyoming economist said.

"A tariff is a tax on an import," Anne Alexander said. "It's way to regulate trade."

Thursday, Trump announced he would impose a 25 percent tariff on steel and a 10 percent tariff on aluminum. Monday, he said he would withdraw the tariff proposal if the North American Free Trade Agreement is renegotiated.

A tariff, Alexander said, shores up a native industry such as American-made steel, which has a short-term benefit for that industry. But if an American company cannot find American-made steel in the domestic market, it will need to pay 25 percent more for steel imported from Canada or other countries.

In other words, a it's a tax.

In Wyoming, affected businesses would include mineral extraction, she said.

For example, a pipeline uses steel. If a pipe manufacturer cannot find American-made steel, it will need to import steel and pay 25 percent more for it. That cost will be passed along to the companies that buy and install the pipe, and that cost will be passed along to the consumer of the product carried in the pipe.

Wyoming coal is used mostly for power plants, but not so much for making steel, which is essentially a wash for that industry, Alexander said. But coal companies buy the drag lines and trucks to haul the coal, and pay the railroads to ship the coal to market -- all of which require a lot of steel, she said.

Farmers and ranchers will pay more for the tractors, vehicles and other implements used in agricultural operations, Alexander said.

And consumers of all walks of life will pay more for household appliances, anything that comes in a can, and vehicles. The cost of a pickup or sport utility vehicle will rise by $400-$500, Alexander said.

Those costs apply to consumers, but there are consequences for domestic producers that export their products, too.

If other nations decide to retaliate by imposing tariffs, producers of American-made goods will suffer because they won't be able to sell their products overseas as easily, Alexander said.

For example, the European Union already has threatened to set tariffs on Harley-Davidson motorcycles and bourbon if Trump's proposed tariffs are imposed.

In Wyoming, Alexander said that could hinder Wyoming's agricultural producers trying to sell their products to Europe and other nations that impose retaliatory tariffs.

If high prices and the inability to sell products weren't bad enough, Alexander said tariffs could carry far worse and unpredictable consequences.

Trade wars can lead to shooting wars.

After World War I, European countries levied tariffs against each other, and the United States sometimes had to bail out those economically battered nations, she said. "The trade wars and economic chaos in the 1920s set Europe up for physical combat in the decades to come."

Since then, the sharing of information and goods happens at a far faster pace in the global economy, Alexander said.

Trade organizations and international agreements have worked through the many of the disagreements and that has made the world a somewhat safer place, Alexander said. "So it was a way to try to harmonize trade across the world so trade would become less of a conflict-oriented activity, and more of an economic-boosting activity."